By Shaheen Pasha
Dow Jones Newswires
NEW YORK - Party organizer to host: I have the champagne, cocktail umbrellas, chorizos and dips ... but the special-events insurance is proving hard to come by.
As the Republican National Convention comes to New York next week, some organizers of the many cocktail parties planned around town are seeking special-events insurance coverage. Such policies, which cover liability and event cancellation, haven't been that popular in the past, but after the terrorist attacks three years ago, they're in demand.
Terrorism and business interruption insurance policies are more widespread, but few companies offer special-events coverage. For the convention, therefore, experts say premiums are up to 30 percent higher than normal.
"Usually people holding a cocktail party don't buy cancellation insurance," said LeConte Moore, managing director and head of the entertainment and media practice in New York at Marsh Inc., a unit of Marsh & McClennan Cos.
"And very few insurance companies wanted to write special events because these policies usually result in a one-time premium for something that is generally high risk," said Moore.
Since Sept. 11, capacity hasn't kept pace with demand. Robert Hartwig, chief economist for the Insurance Information Institute, said Lloyd's, St. Paul Traveler Cos and Chubb Corp. have frequently written these types of policies, as had privately held Fireman's Fund. But the policies are so specialized, few other firms offer them.
Damian Testa, president of Kaye Insurance Associates, a division of Hub International Ltd. in New York, said his firm was approached by a Republican lobbying group Monday for special-events insurance to cover a cocktail party on the historic ship Intrepid during the week of the convention.
"They had been told by the broker initially that it might cost $1,500 to $2,000 for a cocktail party for one night for 500 to 600 people," he recalled.
"Now they're being told it would cost about $20,000 to insure the party."
Testa said given the location, the event and the timing of the party, a $20,000 estimate was a fair premium.
But his firm, like so many others, wasn't willing to take on the risk and passed on the request.
Marsh's Moore, who also brokered insurance for the Democratic National Convention in Boston, said the demand for special-events insurance was significantly lower in Boston.
"Boston had lots of events happening around the city at that time, but there wasn't as much concentration of risk outside of the convention," he said.
"In New York, you have the convention but you also have the fact that it was the center of the 9/11 attacks," he said.
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